Correlation Between Song Hong and Dong A
Can any of the company-specific risk be diversified away by investing in both Song Hong and Dong A at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Song Hong and Dong A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Song Hong Garment and Dong A Hotel, you can compare the effects of market volatilities on Song Hong and Dong A and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Song Hong with a short position of Dong A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Song Hong and Dong A.
Diversification Opportunities for Song Hong and Dong A
Very good diversification
The 3 months correlation between Song and Dong is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Song Hong Garment and Dong A Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dong A Hotel and Song Hong is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Song Hong Garment are associated (or correlated) with Dong A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dong A Hotel has no effect on the direction of Song Hong i.e., Song Hong and Dong A go up and down completely randomly.
Pair Corralation between Song Hong and Dong A
Assuming the 90 days trading horizon Song Hong Garment is expected to generate 3.95 times more return on investment than Dong A. However, Song Hong is 3.95 times more volatile than Dong A Hotel. It trades about 0.31 of its potential returns per unit of risk. Dong A Hotel is currently generating about -0.12 per unit of risk. If you would invest 4,471,879 in Song Hong Garment on September 2, 2024 and sell it today you would earn a total of 448,121 from holding Song Hong Garment or generate 10.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Song Hong Garment vs. Dong A Hotel
Performance |
| Timeline |
| Song Hong Garment |
| Dong A Hotel |
Song Hong and Dong A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Song Hong and Dong A
The main advantage of trading using opposite Song Hong and Dong A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Song Hong position performs unexpectedly, Dong A can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Dong A will offset losses from the drop in Dong A's long position.| Song Hong vs. FIT INVEST JSC | Song Hong vs. Damsan JSC | Song Hong vs. An Phat Plastic | Song Hong vs. Alphanam ME |
| Dong A vs. Song Hong Garment | Dong A vs. Alphanam ME | Dong A vs. Hochiminh City Metal | Dong A vs. Atesco Industrial Cartering |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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